Tesla Q4 Deliveries Fail To Clear Lowered Bar: What EV Investors Need To Know

Zinger Key Points
  • Tesla’s valuation has plummeted amid fundamental issues as well as macroeconomic and geopolitical concerns.
  • The average analysts’ stock price target of $272.41 suggests roughly 121% upside.

Tesla, Inc. TSLA reported fourth-quarter deliveries that came in below the tempered expectations Monday, with the company suggesting that cars in transit increased further during the quarter.

What Happened: Austin, Texas-headquartered Tesla delivered more than 405,278 cars in the fourth quarter, according to an update from the company on Monday, and produced over 439,000. This marked a 31.33% year-over-year increase and a 17.87% sequential climb.

Ahead of the release, most analysts and Tesla watchers trimmed their delivery estimates for the company. The consensus estimate compiled by Tesla’s investor relations was 417,957 units.

Morgan Stanley’s Adam Jonas modeled sales of 399,000 units, while Wedbush’s Daniel Ives estimated 415,000 to 420,000 units.

Model-wise, the company delivered 17,147 units Of Model S/X vehicles and 388,131 Model 3/Y vehicles.

“We continued to transition towards a more even regional mix of vehicle builds which again led to a further increase in cars in transit at the end of the quarter,” Tesla said in a statement.

The electric vehicle maker produced 439,701 vehicles in the fourth quarter, for a 43.77% year-over-year increase and 20.16% sequential growth.

Annual deliveries came in at 1.314 million units, up 40.34% from 936,172 million cars delivered in 2021. The company fell short of the 50% long-term delivery targets it has set for itself.

Production for the year climbed 47.2% to 1.37 million units.

Commenting on the numbers, Martin Viecha, Tesla's head of investor relations, said he was super proud of the team.

See also: Best Electric Vehicle Stocks

Why It’s Important: The underperformance in the fourth quarter comes against the backdrop of a tough macroeconomic and geopolitical environment.

Production disruption due to a COVID-19 outbreak shuttered the company’s Giga Shanghai plant for about a month starting in late March. After resuming production, the ramp-up was slow amid the zero-COVID policy in the country. The Giga Shanghai closed down yet again in July for factory upgrades.

The country was hit with a fresh COVID wave in late 2022. Tesla, however, did not disclose any production disruption.

The demand side of the equation apparently suffered, going by a slew of price cuts Tesla has announced since late October. COVID-19 along with domestic competition has begun to weigh down on the automaker. Future Fund’s Gary Black, who has delved into Tesla’s woes multiple times recently, has said a lack of lower-priced cars in China is hurting Tesla.

Chinese EV upstarts XPeng, Inc. XPEV, Nio, Inc. NIO and Li Auto, Inc.’s LI's December and fourth-quarter numbers released earlier on Sunday showed that these companies prevailed despite the tough COVID-19 situation.

Tesla announced price cuts in other regions as well. As recently as the past week, the company extended the $7,500 discount to buyers of its Model S/X vehicles.

What's Next For TSLA: Tesla stock is coming off a tough year, having fallen about 65.47% in 2022. After bottoming at $108.24, its lowest since mid-August 2020, on Wednesday, the stock picked up slight upward momentum.

The next catalyst could be the fourth-quarter results due on Jan. 25. The string of price cuts, not only in China but also in the U.S. and Europe, do not bode well for margins.

Given the weaker-than-expected reduced estimates, the stock could come in for selling when it opens for trading on Tuesday.

On any potential downside, $110 could serve as support. Further down, the stock has support around the $94.5 level. The stock has upside resistance around the $129 and $146 levels.

Tesla closed Friday’s session up 1.12% at $123.28, according to Benzinga Pro data.

Read Next: Tesla's Pricing Power Will Suffer Due To New IRS Rules For EV Sales Credit, Analyst Says

Photo courtesy of Tesla. 

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